Finance Minister Enoch Godongwana tables one of his toughest budgets in Parliament on Wednesday amid an official unemployment rate which edged back above 32% in the last three months of 2023.
Statistics South Africa (Stats SA) on Tuesday reported that the unemployment rate ticked up slightly by 0.2 of a percentage point to 32.1% in the fourth quarter of 2023, up from a one-year low of 31.9% in the third quarter of 2023.
Stats SA’s Quarterly Labour Force Survey (QLFS) released on Tuesday showed that the number of unemployed persons increased by 46,000 to 7.9 million.
The QLFS also indicated that the number of employed persons fell by 22,000 to 16.7 million after rising by eight straight quarters, having surpassed the pre-Covid level of 16.4 million in the first quarter of 2020.
The crisis with job creation in South Africa is more apparent when gleaned over a 10-year period as the number of unemployed people surged from 4.8 million in the fourth quarter of 2013 to 7.9 million in the fourth quarter of 2023.
Statistician-general Risenga Maluleke said five industries contributed to job losses in the fourth quarter, with community and social services shedding the most jobs.
“We have lost 171,000 in community and social services.
We have also lost in construction 36,000, and in agriculture 32,000 jobs,” Maluleke said.
“The number of people who were not economically active for reasons other than discouragement increased by 218,000 to 13.4 million, while discouraged work seekers decreased by 107,000 in the fourth quarter of 2023 compared to the third quarter of 2023. This resulted in a net increase of 111,000 in the not economically active population.”
Godongwana will also be confronted by a shrinking revenue base as company taxes deteriorate on the back of challenging business conditions which have resulted in a number of retrenchment notices.
Anglo American Platinum on Monday issued a section 189A notice that it would retrench 3,712 full-time employees across various business operations, and about 620 contractors across the company’s production bases, mainly due to declining platinum group metals (PGM) basket prices, declining PGM production output, reduced productivity, significant cost escalations and others.
Kumba Iron Ore on Tuesday also unpacked its plans to retrench about 500 workers, citing the constraints on Transnet rail and port infrastructure that the company relies on to transport the steelmaking material.
Nedbank economist Johannes Khosa said the unfavourable economic environment was clouding employment prospects, and the country’s crippling structural constraints – notably power outages and transport bottlenecks – would continue to undermine sales and elevate operating costs, squeezing private sector profits.
Khosa said fading profits would force firms to cut costs, which could involve retrenchments.
“The platinum-mining industry appears to have reached this point, with several companies announcing large-scale retrenchments over the next year,” Khosa said.
“Given the country’s structural issues, still subdued global demand, and low commodity prices, employment in agriculture, mining, and manufacturing will likely decline further in 2024. Employment growth in most other sectors, including services, will likely stagnate, but not necessarily reverse course.
“We expect employment growth to soften this year, before picking up more next year. The unemployment rate will, therefore, remain high.”
Economist Azar Jammine did not foresee any surprises.
“Godongwana will persist in trying to convey fiscal discipline but at the same time he won’t be able to be too strict because of the general elections. The damage it can do to the governing party if he does will be unduly harsh,” Jammine said.
Efficient Group chief economist Dawie Roodt said: “The context is that the fiscal account is in deep trouble. We all know the fiscal accounts because of the debt level that is unsustainable, the economy and municipalities are not doing well. This is a very difficult environment.”
Cape Times